Founder Series: Gregor Gregersen of Silver Bullion
Crowdfund Vibe has sat down for a fascinating interview with Gregor Gregersen, CEO of Silver Bullion, whose novel take on P2P (Peer to Peer lending) has helped build a solid reputation in Singapore and abroad.
CFV: What motivated you to start Silver Bullion?
GG: I was in the trading room of one of Germany’s largest banks when the 2008 financial crisis occurred. It became very apparent then that the financial system is fragile and that the best way to protect oneself from bank defaults is ownership of physical precious metals as it provides a hedge to systemic financial risk.
Silver Bullion’s mission is to provide the safest store of value possible by eliminating financial counterparty risk and storing bullion in the safest jurisdiction today – Singapore. Our bullion secured P2P loan platform was a natural extension of our precious metals storage, making our P2P loan platform unique in the industry.
CFV: How well known is FinTech in Singapore? What is the coverage of Fintech, specifically Peer to Peer lending and crowdfunding in the traditional media?
GG: The media coverage of Fintech has definitely increased in the past few years in Singapore. However, I feel Fintech is a word that many people in the financial world use to impress others or to raise money. It has become the buzz word used frequently in traditional media but I feel that only a small number of motivated people fulfil the spirit of Fintech. In essence Fintech is to the banking system what e-mail was to the postal system. Once Fintech is truly here most banking jobs will become redundant and we will have better and more resilient systems.
For the general public I don’t think it has much meaning yet. Would the average person on the street want to understand the difference between a pawnshop and a secured P2P loan platform? Probably not. P2P lending and crowdfunding have to keep becoming faster, cheaper and better to unseat services offered by traditional banking.
CFV: Who are the primary users of Silver Bullion? How do their needs differ?
GG: Our clients are financially sophisticated people who seek to protect a portion of their assets from the possibility of a financial collapse involving central bank bail-ins and nationalizations.
This is done through physical precious metals which we store at our 600-tons capacity vault here in Singapore. Our customers own gold and silver parcels which are sealed in tamper-evident security bags which they have the option to sell back to us anytime. We currently store around $250 million worth of precious metals.
This same bullion can be used by customers as collateral to obtain loans on our bullion secured P2P loan platform. One unique aspect of our platform is that loan interest rates are decided by the borrowers and lenders themselves. From this perspective, interest rates for loans fluctuate based on supply of lending funds and demand for loans.
It is an inexpensive way to get low-interest (~3% p.a) loans and borrowers can use the funds for any purpose they want. Our P2P loan platform is very safe for lenders since the collateral is a very liquid asset – physical gold and silver bullion. Each loan is also backed by 200% worth of collateral. The collateralized gold and silver cannot be withdrawn or sold by the borrower until the loan is repaid. Our P2P loan platform has facilitated more than S$16 million across 600 successful loans. We continue to have a zero default rate till date.
CFV: What is the government’s attitude to Peer to Peer lending? What regulation is in place?
GG: Currently MAS (the Monetary Authority of Singapore) is supporting P2P lending and crowdfunding in principle – other than AML (anti money laundering) and KYC (know your customer) requirements – and is having minimal regulations to enable its growth. MAS has stated that once P2P lending and crowdfunding platforms become more systemically relevant, they will review their regulatory framework in this regard.
Having said this, I understand that recently MAS has started a review for crowdfunding activities. I believe they are looking to make the industry safer for investors given that most platforms today are in the area of unsecured lending. In view that our lending platform has physical collateral behind every loan, it is possible that new regulations that has a focus on unsecured lending may not have too much impact on us.
CFV: What is the largest loan that has occurred through your platform?
GG: The largest single loan was 200,000 USD (about 270,000 SGD). With hard assets like gold and silver being collateral, customers can easily obtain a high value loan as long as they have the precious metals to back their loan requests.
CFV: How do you regulate who can lend and borrow money on your platform?
GG: All storage customer must go through our KYC / AML check before they can have a storage account with us. Given that loans on our P2P loan platform are made in the USD or SGD, lenders would need to lend in either currency. Borrowers would need to have gold or silver stored with us before they are allowed to list a loan request on our platform.
CFV: What is the biggest challenge you have faced in setting up Silver Bullion?
GG: For Silver Bullion, there was no single biggest challenge. We saw a need in the industry to better preserve wealth and eliminate financial risks at the same time. Given these fundamentals, it took passion, perseverance and 8 years of continuous improvement to be where we are today.
For the bullion secured P2P loan platform, our initial plan was to find a reliable bank to provide funds for loans given the collateral stored in our vault. It was a challenge to navigate the red tape in banks to find the answers we need. In the end, it did not work out and we forgo the plan to work with banks. This was a blessing in hindsight. Bypassing banks altogether and moving to a Peer-to-Peer model was the perfect solution as it provided very reliable funding and allowed our P2P loan platform to scale organically without banking politics.
CFV: Where do you see Fintech, specifically P2P lending, in 5 years time, both in your country & globally?
GG: I see banks declining in importance as they become increasingly irrelevant due to inefficient processes, antiquated IT legacy systems, politics and eventually bankruptcies from inherent systemic risks.
From a Fintech perspective, I hope that some sort of block-chain standard will eventually emerge that will be recognized as a valid alternative to bank statements by one or more of the large auditing companies. Once this happens, Fintech will truly revolutionize our world because payments will no longer have to flow through traditional banks and I would imagine that global companies like Google and Apple will play a big new role.
P2P lending will continue to grow as investors and even the banks themselves will increasingly participate in it simply because it simplifies how a loan is made out, creates a win-win situation between borrowers and lenders and kicks the door wide open for more to participate in an area previously dominated mainly by banks.